The hidden face of Primark fashion

The huge fashion store Primark sacked three of its suppliers last week after an investigation for the BBC's Panorama and The Observer uncovered children labouring in Indian refugee camps to produce some of its cheapest garments. Here we reveal the brutal reality of a supply chain that sees children as young as 11 sewing T-shirts which cost shoppers just a few pounds to buy on high streets across Britain.
Watch the Panorama preview here

Its unrivalled success took the competition by surprise as it won over both the high-street shopper and the diehard fashionista with its simple philosophy: high on style, low on price.

When Primark was launched, its flagship store in London's Oxford Street was besieged by stampeding bargain-hunters and sold more than a million garments in its first 10 days. The opening drew a bigger crowd than that managed by Topshop's much-hyped launch of its Kate Moss collection, which featured the supermodel herself moodily posing in its windows. Fashion bible Vogue gave a Primark jacket high-end credibility.

Last week, in an announcement that effectively pre-empted publication by The Observer of this investigation, Primark announced it had sacked three of its clothing suppliers in India after being told by the BBC's Panorama programme of evidence that it was subcontracting labour to child workers. The investigation found that in the refugee camps of southern India young children had been working long hours in foul conditions to sew the designs that will see, at current growth rates, Primark eclipse Marks & Spencer as Britain's biggest mass-market fashion retailer by 2009, taking £1 of every £10 spent on clothing in the UK.

Other major retailers are scrambling to follow the cheap, fast and fashionable concept - for good reason. Worth an estimated £5bn, the Primark chain now has 4.8 million sq feet of retail space across 177 stores in three countries, employing 25,000 people. But as this child labour scandal shows, the Irish conglomerate, which sells one in every 10 items of clothing bought in Britain today, had little control over part of its supply chain. Campaigners are now demanding that the UK government acts to force companies to be responsible for the welfare of workers all the way down their tangled supply chains.

Primark sacked the three suppliers before being hit by a wave of negative publicity inevitably coming its way from the documentary. The firm, owned by Associated British Foods, said it had made the statement to fulfil a responsibility to shareholders, not - as cynics suggested - to lessen the shock of an international exposé. The retailer said that, as soon as it was alerted to the practices over a month ago by The Observer and the BBC it cancelled new orders with the factories concerned and withdrew thousands of garments from its stores.

The speed at which Primark acted may mean that its standing in the high street remains secure, its reputation repaired before many of its customers will have even noticed it was tarnished. But at the other end of the world nothing has changed for those tiny links in the chain of supply that is meeting the British appetitive for cheaper and cheaper clothing: children like Mantheesh, who works for one of the sacked suppliers. At 11 her life is already an extraordinary story of survival. An orphan, this Tamil refugee had fled the bombings of Sri Lanka only to find herself abandoned by an opportunistic trafficker on a sandbank 10 miles off land. Exhausted and dehydrated, in the middle of the treacherous Palik Strait, the channel between India and Sri Lanka, she was rescued by fishermen just as the tide was closing over her.

Mantheesh ended up at India's Mandapam transit camp, a fenced-off series of dilapidated, one-storey cement blocks, 12 miles from the flat Arichalmunai beachfront, the first port of call for Sri Lankan refugees brought in by smugglers. She traced the path of thousands of her fellow refugees, moving north to the camps of the major textile industry region of Tamil Nadu where menial jobs are available to those desperate enough to take them. Mantheesh went to Bhavanisagar camp, 60km from Tirapur. Within months she was absorbed into India's burgeoning economy, hand sewing from dawn to dusk for a businessman who had shrewdly recruited hundreds of refugees on the cheap to make garments destined for half a dozen European firms, including Primark.

Working for The Observer over the past three years, I have helped expose several of the world's major retailers: Otto-Heine, the largest online fashion retailer in Europe; Esprit, the world's fifth largest clothing store; and Gap Inc, one of the most iconic modern brands, all for employing children. Each firm, without its knowledge, had used Indian contractors with scant regard for the consequences of subcontracting.

In the maze of narrow, mud-bricked lanes that form the spine of Delhi or Bangalore's poorest market areas, outsiders are highly conspicuous. The tightly packed buildings and heavily secured basements make it difficult to detect what goes on behind closed doors. Some of the units were hidden behind trapdoors, one was in a half-demolished building reached only by a rope ladder. Runners and watchmen are everywhere, protecting illicit drinking dens, brothels and sweatshops.

Carrying out an Observer investigation into child labour last year, I was badly beaten for being found inside a sweatshop in the lawless Haryana state border area of northern India. An angry mob chased me through the ancient alleyways, a no man's land for foreigners and police. They smashed photographic equipment and threatened to kill my translator, who had his eardrum perforated in the attack.

According to Bhuwan Ribhu, lawyer with the Global March Against Child Labour, which has had activists murdered by sweatshop gangsters, the fight to expose child labour is increasingly dangerous for both journalists and activists. This, he claims, is one of the key reasons many big names in fashion escape international exposure.

'What consumers need to understand is it is an impossible task to track down all of these terrible sweatshops and factories employing children, particularly in the garment industry when you need little more than a basement or an attic crammed with children to make a healthy profit. The police have to rely on rare tip-offs because it is difficult to track down child workers. Even before the search parties get to the factories the owners are tipped off and many of the children are cleared out,' he said. 'More daring unit owners even hide the children in sacks and in carefully concealed mezzanine floors designed to dodge such raids. We have lost a number of activists, murdered in the course of their duties. Others have been dragged in chains behind cars.'

Now, after a seven-month undercover investigation into India's sweatshop misery for Panorama, Primark is added to the growing hall of shame of retailers proven to have had children making their clothes. Primark has been steered to success by its chairman Arthur Ryan, a reclusive Irishman in his seventies, recently voted Britain's most influential retailer by trade magazine Drapers. The Dublin-born businessman is known to inspect his stores disguised in an old mac. But over the past few days it is George Weston, chief executive of AB Foods, who has taken control of the purge, describing Primark's Indian contractors as being guilty of 'wholesale deception' and leaving him little option but to cancel millions of pounds worth of orders. That move attracted criticism from NGOs like Labour Behind the Label, which accused the firm of 'cutting and running' from exploited workers.

A Primark spokesman told The Observer that the firm is appointing an agency 'as a partner to act as its eyes and ears on the ground' and is establishing a charitable foundation for children. He said: 'Primark is an ethical organisation and takes its responsibilities seriously, and it is an absolute outrage for anyone to suggest otherwise. The BBC came to us with very serious allegations about the conduct of a small number of factories that sell to Primark which we investigated immediately and very thoroughly. What we found left us with no option but to drop those factories - no right-minded person would have done anything different.

'We continue to buy from many other good suppliers in the same region, and the overall value of our orders will not change as a result of this. The Primark Better Lives Foundation will provide financial assistance to organisations devoted to improving the lives of young people, including those identified by the BBC. Millions of people will continue to benefit from our business. Our customers can shop at Primark safe in the knowledge that it is an ethical organisation which also helps to give people in the developing world a higher standard of living and a better quality of life.'

John Hilary, executive director of War on Want, said the discovery of child refugees working for Primark represents a line in the sand for retailers and their customers. War on Want, like many NGOs, now wants input on the matter from Downing Street.

In the UK the term 'the race to the bottom' was coined to describe the practice of international retailers employing developing world contractors, who cut corners to keep margins down and profits up for western paymasters. And indeed tracing Primark's supply chain became an intensely complex hunt from New Delhi to the southern reaches of the subcontinent.

Mantheesh's home, the Bhavanasagar refugee camp, was at the very bottom. The Primark supplier in question, a major Indian exporter called Fab n Fabric, had employed a subcontractor who had discovered the ultimate disposable workforce: child refugees.

In northern Sri Lanka, where the war continues between separatist Tamils and the Sri Lankan government, the decision to leave is increasingly an economic one. 'The cost of being smuggled to India is the equivalent of £80,' said Meenakshi Ganguly of Human Rights Watch. 'The trip often requires families to sell property or their wedding gold. They travel by illegal boats and most hope to head north to find work. They are caught between a rock and a hard place.'

About 76,000 Sri Lankan refugees live in poverty in 102 camps across Tamil Nadu. Several hundred thousands more have been absorbed into India's black economy. The state government provides a relief package to those in camps - the head of a family gets 200 Indian rupees, around £3, a month, with smaller payments for additional family members.

Police and state intelligence officers are stationed at the gates of many of the camps. One government official told The Observer the police protect the refugees, but Tamils believe their guards are more concerned with controlling and monitoring their movements.

In Bhavanasagar, many of the children hand-sewing Primark garments had been born in the camp. Others, orphaned or detached from families by war, were more recent arrivals. Home for most are crude huts, amalgams of straw and broken pieces of corrugated iron. The shop offers cheap cigarettes, sold in singles, and dry biscuits.

Most rely on the black economy to keep their head above water and local employers pay them far less than the going rate. A major industry needing child labour is sequin and Zari work, intricate embroidery immensely popular in America and Europe. Children's thin, nimble fingers can work quicker on intricate ethnic designs. But by the time the youngsters engaged in the Zari sector reach their mid-teens, their hands and eyesight are often badly damaged by long hours of tedious work in dark rooms.

Their growth is often stunted by years of sitting in uncomfortable, hunched positions at the bamboo-framed workstations. The child workers have no fixed hours of work, nor is there any trade union to fight for their cause. For those who get paid at all, the combined wages of five children is less than that of one adult.

'I go to a house in the camp every day,' said Mantheesh. She sat in waist-high piles of Primark garments, many with labels and reference tracking numbers showing their destination in the UK and Ireland. 'Sometimes we get major orders in and we have to work double quick. I am paid a few rupees for finishing each garment, but in a good day I can make 40 rupees (60p). The beads we sew are very small and when we work late at night we have to work by candle - the electricity in the camp is poor.'

According to Bhuwan Ribhu, using refugees shows contractors have reached bottom in their quest to satisfy major retail conglomerates. 'Here is a question for Primark,' he said. 'Are they confident, considering the sheer bulk of orders they place in India, that the rest of their production chain is beyond reproach? How will they ensure no other children are involved in their supply chain? I would like to know the answer.'

Last week George Weston denied that using child labour was an unavoidable consequence of selling goods at very low prices. He said: 'The way we get to a £2 T-shirt is not through letting children work on embroidery. It is because of low mark-ups and big volumes. Our overheads are low and we don't run expensive advertising campaigns.'

He said Primark paid its suppliers the same for a £2 T-shirt as more upmarket retailers which charge customers more. 'We don't want kids working on our clothes. We bring a lot of good to the people who work in our factories in proper working conditions. We want people paid properly. We are very angry. We thought we knew these people [the suppliers] and thought we were doing good, and then we discover this issue. We feel very let down.'

Whether our Primark investigation will be a line in the sand for UK shops and shoppers is unclear. The Indian textile industry is now worth hundreds of billions of pounds, and today somewhere between 60 to 115 million children will be at work in factories, picking rags, making bricks, polishing gemstones, rolling cigarettes, packaging firecrackers, working as domestics, and weaving silk saris and carpets.

Wherever there is massive demand and money to be made, children will be found on the production line.

· Dan McDougall is a foreign correspondent with The Observer and the associate producer of 'Primark: On the Rack', a Panorama special to be broadcast tomorrow at 9pm.

Born to lives of child labour

· One in six children in the world today is involved in child labour, doing work that is damaging to his or her mental, physical and emotional development.

· Globally, between 210 and 240 million children are child labourers.

· 126 million of these children are engaged in hazardous work.

· Every year 22,000 children die in work-related accidents.

· 73 million working children are under 10.

· Sub-Saharan Africa has the largest proportion of working children - nearly one-third of children aged 14 and under.

· 5.7 million children are forced into debt bondage or other forms of slavery.

· 70 per cent work in agriculture, fishing or forestry, 8 per cent in factories, wholesale and retail trade, restaurants and hotels.